As the markets have evolved, trading in small cap stocks has presented some unique challenges. In an effort to address these challenges, the SEC introduced the Tick Size Pilot, a data-driven test to evaluate whether or not widening the tick size for securities of smaller capitalization companies would impact trading, liquidity and market quality of those securities. On April 19, the Equity Markets Association (EMA) published a notice with initial data findings, which you can read here.
The effects of the Pilot may not be surprising, however, it is too early to form definitive conclusions about the Pilot given that market participants are still adjusting to the Pilot’s quoting and trading requirements. As the Pilot progresses, we look forward to sharing any updated data findings.
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